Besides grants and scholarships, another excellent option that can help students afford college is taking out a student loan. Student loans come in handy for those with a tight budget who want to pursue higher education. This option offers lower rates and fees, and doesn’t require good credit standing. However, be aware that paying off student loans is not as easy as it seems.
You’re enthusiastic and are finally ready to join the workforce, only to be faced with the task of tackling your debt during your first years of employment. We all want the freedom to spend our money on things that are important to us, so if you want to get rid of that debt fast, here are some tips to consider:
Pay more than the minimum amount
One of the best ways to pay off your student loans fast is to pay more than the minimum required amount. Paying more may not initially sound ideal, but if you look at the bigger picture, making extra payments can help you reach your goal of paying off that student loan significantly sooner.
Take advantage of your grace period
If your lender allows a grace period after graduation before you need to start making payments, it’s a good idea to use this time to start paying off your debt. Don’t ignore your student loan and wait for the grace period to be over before dealing with it. If you’re already employed, take advantage of this time to plan out your budget and begin the payments early. Stick to paying the required amount on a monthly basis. This is a good way to practice allocating money each month for loan payments.
Split your payments into two
Another trick you can use for paying off your student loan quickly is to split your monthly payments into two. For example, if you’re supposed to be pay $250 every month for your loan, you can divide this amount in half and pay $125 twice a month. You won’t notice it but at the end of the year, there’s going to be one extra payment made. This is also an excellent way to better help you manage your finances especially when you get your paycheck every 15th and 30th of each month.
Sign up for automatic payments
Signing up for an auto-payment option will automatically deduct your loan payments from your account each month. Though it may not have have a significant impact on your overall debt, it can help to reduce interest charges a bit. Not only will this help ensure that you will not miss a payment, but it will also help add more cash toward the outstanding balance.
Be mindful of your spending habits
If you have a loan to pay off after college, you must be very mindful of how you spend your earnings. Be aware of your monthly expenses and look closely at where your hard-earned money is going. If possible, try to live the same lifestyle you were used to back in college. This doesn’t mean that you don’t deserve to enjoy living better, especially now that you’re making money. However, it’s even more important to tackle your debt situation so you can enjoy a more enjoyable and comfortable lifestyle in the future.
If you can, consider splitting living expenses with friends by sharing an apartment instead of choosing to get your own place. Skip the extravagant lunch or dinner dates with co-workers or other pricey activities. You can enjoy your social life without spending too much. Don’t go overboard with shopping. By applying the right amount of frugality in your lifestyle, you can pay off your student loans faster.
Another option you can consider is refinancing your loan, especially when you already have a steady stream of income and good credit standing. Refinancing allows you to get a new loan term, which will usually be shorter and come with a lower interest rate. For example, instead of paying off your student loan for 8 years, you may want to consider reducing the term to 6 years. The monthly payments may be higher but this will help you pay off your loan quicker. It will also allow you to save money on interest.
Pursuing a degree in higher education in the U.S. is no easy task, which is why an increasing number of students consider student loans as an option. Nobody wants to get stuck with long-term debt, so if you’ve taken out a student loan to pay for your college education, you can find these tips useful to help you pay off student loans fast.
For more helpful financial tips and resources, or if you want to learn more about the loan services we offer, please feel free to visit Calcite Credit Union.